Galway city property report

As part of The Galway Advertiser’s latest series of property reports, in conjuction with our classified website www.classifieds.advertiser.ie, we take a look at the situation in Galway city

BY CAROLINE WHELAN Galway Advertiser, Thu, Feb 12, 2015

The property market in Galway continues to be extremely buoyant with more than 500 residential and commercial properties sold in the city centre and its surrounds in the final six months of 2014.

Properties in the Taylor’s Hill area continued to attract the highest prices in Galway city. The most expensive house sold in the second half of last year was a six bedroom, detached home at 2, Averard East, Taylors Hill, which fetched €725,000. In July, at nearby Averard West, another six bedroom detached family home reached €720,000. Homes in Maunsells Park were also making significant money, with 12 Ard Na Coille selling for €670,000 in July. The next most expensive property sold was a contemporary five bedroom detached home in Rockbarton Park, Salthill, which made €615,000 in August.

At the cheaper end of the scale, a two bedroom terraced house at 218 Castle Park sold for €50,000 in July, while a three bed terraced home in the same estate made €65,0000 in December. Two lower priced two-bedroom apartments at Gleann na Rí student campus in Renmore made €50,000 each in October while a house at Cluain Ard, Ballybrit fetched €60,000 in December

Government scheme a plus

Auctioneers report that the Government’s Capital Gains Tax incentive, which ended on December 31, significantly boosted last year’s market. The scheme attracted a lot of interest as CGT is not payable on the property, if the buyer holds on to it for seven years.

Don Colleran of Colleran’s Auctioneers, which specialises in city centre properties, says the incentive led to a bit of a frenzy among investors. “The last six months of 2014 were very busy and the CGT incentive definitely drove that. It essentially meant buyers save around 33 per cent of the overall price. We had a situation at our final auction of the year, where two two-bedroom apartments were sold for around €150,000 to buyers from Dublin who had not even viewed them. One of the apartments was in Woodquay and the other in The Old Malt Arcade off Shop Street. The buyers went for them solely because of location and guaranteed rental income.’’

Mr Colleran says that he hasn’t seen any major improvements in the commercial property market but the residential area is very strong. “I think the price of properties within a four to five mile radius of Eyre Square increased by more than 20 percent. The demand is there, all the properties that are coming onto our books are selling very quickly. The guide price is being exceeded in most situations and we definitely have more buyers than sellers at the minute. We are actually crying out for residential properties. To give you an example, we are selling a four bedroom house at Binn Bhann, Knocknacarra. At the very first viewing on Saturday, I had 20 people through the house and within a half an hour had achieved the guide price.’’

New mortgage rules

Speaking about the new rules where mortgage holders have to save a bigger deposit, the auctioneer believes this is going to make life a lot more difficult for first time buyers. “After all that has happened, it is understandable that the Central Bank want to get involved but it means potential buyers will be trapped in rental situations for longer, therefore pushing rents up and making properties more attractive for investors. The profile of first time buyers has changed, they are usually couples looking to the future and are not looking for an apartment but a three bedroom semi. The investor is shopping in the same market. It is impossible to compete with somebody who is buying with cash. Lending is still quite restrictive. Somebody might get mortgage approval in principle, but that is very different to actually drawing down the money. They could be bidding but just have approval in principle and run into difficulties when they actually try to access the money.’’

Patrick Cormican of Winters Property Management says there is great confidence back in the market in Galway. He says while prices in residential properties have obviously risen there is still great value to be obtained when comparing prices to the boom times, and buyers appreciate this. “There was a very positive end to last year with the Capital Gains Tax allowance, but given that is finished, we are continuing to get calls from investors which is encouraging. There are still people out there with spare cash and the fact that interest rates in the bank are so low, they are looking to get their money working for them. For example, we are selling properties at two student accomodation developments in Gort Na Coirbe, Terryland and Glasán at GMIT. There is interest in this type of accomodation as people feel there is a decent return to be got there. They are what we describe as hands-off investments, as we also manage the developments so there is no work to be done with them.’’

Mr Cormican knows he could never have enough choice for potential buyers. “Any agent will tell you, they could never have enough properties on their books.’’ He says demand is always strong for three and four bedroom semi-detached homes in suburbia. “Places like Roscam, Doughiska, Knocknacarra, and Oranmore in particular because of its location near both motorways [Limerick and Dublin] remain very popular.’’ However, he predicts prices will remain steady in Galway in the coming year and there will be no mini boom similar to what has been seen in Dublin recently. The new mortgage rules will also have an effect on preventing this.

Shane Heskin of Heskin Auctioneers says that because there has been no major development since 2007, supply and demand is obviously an issue. He says the majority of properties which are coming onto the market are performing strongly demand due to lack of supply. “There are definitely customers for residential property throughout the whole city. In many areas, property is now being sold for more than it cost to build. For a long time, it was being sold below the cost of development. We can see there is a need for new homes to be built. There is a certain amount of development land available around the city, a lot of which is in NAMA. There are a few builders out there who seem to have access to funds, if they can secure the land. They would not necessarily be the names people would have been familiar with in the past.’’

Commercial demand

Mr Heskin says he has seen a significant improvement in the commercial property area, but businesses have no interest in older properties that are not up to scratch - they want modern, purpose built office and warehouse space. “The commercial market is very specific; offices with facilities like raised floors, drop ceilings, category six computer specification and air-conditioning are in demand. There is definitely a shortage of quality office space in the city centre and its outskirts. It is similar with the warehouse market - companies only want high quality units suitable for manufacturing use. We were involved in the Zimmer deal in Oranmore. When we went looking for properties, there was very little available that would have met the medical device company’s needs but luckily we eventually sourced a suitable building.’’